Coronavirus set to impact Qantas

Alan Joyce is saying that it is too early to tell how many millions of dollars Qantas will lose in the wake of the deadly coronavirus outbreak. Qantas is yet to release an earnings guidance on the financial impacts of the virus to the ASX and may do so when it releases its half-yearly results on Feb 20th.

As a bit of a guide the SARS virus in 2003 negatively impacted Qantas by $55 million. Qantas international traffic fell 11 per cent and domestic load factors dropped 4 per cent. Investment bank UBS has reduced its earnings per share estimates for Qantas by 4-5 per cent to account for the expected decline in air travel.

Qantas’s hit which will be significant will be nothing like the hit to Chinese airlines like Cathay Pacific, Air China and China Southern. The Chinese Government may well have to step in to bail these airlines out.

The immediate response from Qantas is likely to be to reduce capacity particularly on some routes into coronavirus-affected areas. Qantas has already suspended its services to mainland China from next Sunday as a result of the coronavirus. Qantas didn’t have much choice as the Australian government has shut its borders by denying foreign travellers’ entry to Australia who have left or passed through mainland China.

Qantas in conjunction with the Federal Government evacuated Australians stuck in the Wuhan province. Qantas has had to do a deep clean of the 747-400 aircraft used in the evacuation flights to eradicate the risk of the coronavirus. Normally items like blankets, pillows and headphones are cleaned and re-used. Not this time. These items were destroyed. The cabin itself was cleaned with hospital disinfectants. This includes all seats, floors, armrests, tray tables, overhead luggage bins and walls. The aircrafts High-Efficiency Particle Filters (HEPA) were also replaced. These medical grade filtration systems filter and recirculate the air from the cabin and mix it with fresh air eliminating 99% of particles, including viruses. To date, no passengers on the these 2 Qantas flights have been diagnosed with coronavirus.

Qantas has come out swinging at the Transport Workers Union saying airline workers’ concerns about the coronavirus are a result of “fearmongering”. A Qantas employee (and union delegate), was stood down after telling colleagues they didn’t have to clean planes coming from China if they held fears for their safety going against the advice of health authorities.

Source: Cost of coronavirus to Qantas too early to tell by Lydia Lynch SMH Jan 29th, Qantas to suspend services to mainland China from Feb 9 by Jamie Berry SMH Feb 1st, Coronavirus gives Qantas another headache to deal with by Elizabeth Knight SMH Feb 1st, How Qantas is decontaminating coronavirus planes by A Curren www. Feb 10th.

David Broadbridge

David Broadbridge holds a Bachelor of Commerce at the UNSW and a Dip Ed at UNE. He is the former Head Business Studies teacher at Pymble Ladies College. Follow David on Twitter or read his Qantas News Blog.